Mosaic Agriculture

I am passionate about including smallholder farmers in the 21st century agrarian economy. The idea for Cinch came from living with smallholder farmers in west Africa and learning that farming at small scale is a poverty trap. Cinch takes a new approach to addressing this problem: transferring all risk associated with growing crops away from smallholders and providing a guaranteed income.

Before Cinch, I was the Director of Policy and Outreach at Tala, a financial technology company providing access to credit for the globally underserved. At Tala, I co-founded the Digital Lenders Association of Kenya (DLAK) to advocate for responsible digital credit products. I also launched Tala's operations in the Philippines, building a local team of 100+ employees and monthly revenue of over $10MM.

Prior to Tala, I was a Consultant at Dalberg Global Development Advisors, and served as a Peace Corps Volunteer in Cabo Verde.

Cinch solves two problems:

1. Smallholder farmers cannot invest to generate a reliable income on less than 10 acres of land
2. Because smallholders collectively own large percentages of arable land in emerging markets, the agricultural sector is under-productive in these countries

In 2019, we built a model farm to solve both of these problems. Cinch worked with a community of internally displaced persons (IDPs) in central Kenya to pilot a new approach to agriculture. Dozens of families agreed to lease their land to Cinch and we invested in irrigation systems and a professional farming team. Cinch ran these 53 small plots as one commercial "mosaic" farm, growing high value horticulture products like French Beans and garlic.

Selling crops at a high margin allows Cinch to provide three immediate income opportunities to poor farmers:

1. Guaranteed monthly income from their lease
2. Job opportunities on Cinch's farm
3. A quarterly dividend whenever Cinch is profitable

Cinch is creating a path for smallholders to transition out of farming, while building long-lasting wealth. More than 2 billion people live in smallholder households with little prospect of escaping poverty. This poverty trap exists because making a stable income through farming requires investment, and poor farmers can't afford to invest.

Helping smallholder farmers means addressing poverty, as they comprise 75% of the world's poor. Many organizations believe the solution is to help smallholder farmers access to capital. We believe that only a complete risk transfer, giving farmers guaranteed incomes, can help farmers build prosperity.

How does Cinch transfer risk? We grow produce for farmers, including installing infrastructure and bringing a professional agronomy team. Those investments only make sense at scale, which Cinch reaches by aggregating plots together to create a "mosaic" farm comprised of many smaller parcels. Farmers bear no responsibility for these costs, nor do they suffer if yields are below expectations; that's Cinch's responsibility.

With a guaranteed income from Cinch's monthly lease payment, farmers can afford to live differently. As Cinch manages their land for them, farmers save their income and make transformative investments, like sending their children to school and improving their home. 

Cinch is a land transformation company that constructs commercial farms. Our commercial farms are unique: rather than a single tract of land, they are the aggregate of dozens of small plots. Farmers who previously farmed these plots themselves instead lease the land to Cinch. We call this "mosaic agriculture".

Our approach functions as a risk transfer: Cinch absorbs the costs associated with installing irrigation and buying inputs to grow higher value crops, while also bearing responsibility for selling those crops. The farmers who previously had highly volatile earnings from farming at small scale now earn guaranteed income in the form of a monthly lease payment. These farmers also have access to job opportunities on the large scale commercial farm Cinch has created with their land, and receive dividends according to how much land they contributed.

The impact is clear: farmers earn five times more than they did before, land is dramatically more productive and the agriculture sector in underdeveloped markets has taken a large step forward toward realizing its commercial potential. Farmers continue to own the land, while Cinch increases the value of the farmer's primary asset.

Village 2 in Solio, Laikipia County, Kenya has 2000 households. Last year, each earned an average of $400 USD. In some ways, Village 2 is remarkable: its residents were forcibly relocated in 2008 from a nearby forest. For leaving behind their entire lives, the government gave them 1/2 acre to live on, and another 4 acres to farm.

In other ways, they are unremarkable: like 2 billion others globally, they earn much of their income from farming a small parcel of land and fight a constant struggle to cover expenses. 

Farmers who joined Cinch are older, generally over 50, and rely on their children to financially support them. They live without running water, in houses that with dirt floors and no electricity. Virtually none have access to Kenya's NHIF healthcare insurance or NSSF social security fund.

We know who they are because we spend hours sitting in their homes, discussing their families and understanding their challenges. We also meet outside their homes, in the fields and sometimes at our office, and ask what they like about Cinch, and what they would change. We always listen and search for a middle ground to meet their needs, while building a sustainable business. 

Why is agriculture in Africa underproductive? 

Two key reasons are that land is fragmented, and fragmentation inhibits investments that make agriculture profitable. Smallholder farming drives land fragmentation and has existed for millennia. For a smallholder to stop farming, she needs to know there is a better alternative.

Finding an alternative for smallholders to prosper should not require a leap of faith. Farmers choose Cinch to manage their land because we deliver immediate value: when a farmer joins Cinch, she starts earning within minutes.

Farmers change their behavior because Cinch gives them a choice, but the choice is always theirs.

At Dalberg Global Development Advisors, I led a project for USAID to understand whether smallholder farmers in Mozambique would be willing to buy climate resilient maize seed.

The value of this seed seemed clear: regardless of drought, farmers could expect above-baseline yields. This would directly translate into more income.

Yet, while interviewing hundreds of smallholder maize farmers in Tete, Nampula and Mocuba, a few paradoxes emerged. First, farmers rarely had a clear understanding of their costs. For example, the government routinely sold traditional seeds on subsidies, or farmers reused their own seed. Second, whenever farmers could share their past annual revenue, there was a boundless optimism about how much they would earn next year, regardless of whether that was consistent with the past. Finally, the idea of growing their maize differently, particularly if it required an up-front investment was unconscionable: if something went wrong, their families would starve.

My core insight from these conversations was that, while farmers were aware that their existing practices were keeping them poor, being poor is better than starving. That realization was both heartbreaking and an invitation to consider the root problem: how can we eliminate risk so these farmers could try something new?

I lived with a family of smallholder farmers, Tellis and Anna Andrade, as a Peace Corps Volunteer in Cabo Verde. As with millions of farmers globally, they are caught in the poverty trap of smallholder, semi-subsistence farming. They can neither afford to stop farming (they would starve) nor invest in their land for it to generate a durable income. By farming alongside Tellis and Anna on the island of Santiago, I learned that poverty perpetuates itself because it denies the fundamental tenet of capitalism: reward requires a risk. When you're a poor farmer, you can't afford to take any risks, like taking loans to install irrigation, because if you fail, your family can't eat.

We've built a model farm to demonstrate that our concept works. On 200 acres, we've recruited nearly a hundred farmers and are on track to deliver annualized revenue of over $15,000 USD per acre. That represents a >1000% increase in productivity of the land, and allows us to multiply farmers' incomes by at least 5x. We've recruited farmers, aggregated and transformed their land, and delivered produce to our buyers. We are excited to replicate these results with a second (and third) farm in Kenya. 

That progress is a testament to my efficacy as an operator. Beyond analytical skills that I built as a consultant for the UN Foundation, USAID and WFP, I can achieve results in low resources environments. This skillset, which I first developed as a Peace Corps Volunteer working on an arid island in west Africa, helps my teams convert strategy into action. 

I work effectively with a diverse array of stakeholders to achieve results together, as evidenced by Cinch recruiting dozens of farmers, raising money from global investors and partnering with high impact organizations across Kenya. I am tactical, constantly evaluating how our team can achieve the most impact relative to our limited time and budget. We built a fully irrigated 200 acre farm out of idle pasture land in 10 weeks, while navigating all of the official processes around registering our business, compensating our workers and sourcing water and power sustainably.

In 2019 and 2020, Kenya has had some of the worst flooding in decades. Between November and April of this year, central Kenya experienced over six times the annual rainfall on a monthly basis. In February, Cinch lost our entire first garlic harvest to Downey Mildew, an inoculum that proliferates in flooding conditions.

Losing over $400,000 in revenue within five months of launching our business was a tremendous setback. The constant threat of the worst swarms of locusts in East Africa in 75 years made the situation even more precarious.

Cinch is resilient. We combated these environmental challenges by developing a comprehensive land preparation strategy to counter inevitable floods to come. Our teams now prepare beds 45 cm tall to lift seeds above flood waters, and cut sloped drainage channels to wick waters away. We've also partnered with a subsidiary of Swiss Re to insure our crops with multi-peril protection, including total losses due to flooding and its effects. 

Cinch has overcome tremendous adversity to deliver on our promise of transformative incomes for some of the world's poorest people.

My core responsibility as a Peace Corps Volunteer in São Nicolau, Cabo Verde, was teaching students aged 12-20 at the local high school. I continue to admire teachers for their incredible impact in a highly challenging role, but also now appreciate how teaching is a wonderful platform to have broader impact in the community.

Through my students, I met their families. By visiting their parents at work, or having dinner in their homes, I quickly deepened my understanding of their daily lives and challenges they faced. We built trust. That trust, which started by teaching their children and grew by spending time with siblings, parents and grandparents, became a foundation for many more projects we built together in the community.

To reduce the incidence of drowning, we opened a swim school. Farmers in the community worked with me to found the country's first seed bank to improve maize quality. In our village, I worked with a local entrepreneur to open a laundromat, which helped save precious water lost while hand washing clothes. Businesses I co-founded created dozens of jobs in an economically depressed community; all of these businesses still exist nearly ten years later.

We are the only mosaic farm in the world. By "mosaic" farm, we mean a commercial farm, selling high value crops for export, owned by smallholder farmers. This is what is looks like:

Each individual plot is owned by a smallholder farmer, while Cinch installs irrigation equipment and grows crops. By consolidating the management of this land, Cinch benefits from economies of scale, reducing costs while increasing our bargaining power with buyers. As a result, we can sell our crops on forward contracts with guaranteed prices, which locks in revenue and builds a substantial operating margin. That profit allows us to pay dividends to farmers and continue to expand the farm.

This virtuous cycle has a massive impact on land productivity, increasing the revenue each acre generates from $500 per year (growing low value crops like maize for local consumption), to over $15,000. This model can break the poverty cycle of smallholder farming: instead of land constantly getting subdivided and losing productivity, Cinch allows smallholders to become shareholders in commercial farms.

Our theory of change is to provide a pathway, outside of agriculture, to durable wealth for smallholders.

• Current number of beneficiaries: 2,788 farmers, workers and family members
• Number of beneficiaries in one year: 34,000 farmers, workers and family members
• Number of beneficiaries in five years: 300,000 farmers, workers and family members

We see horticulture as the key to establishing a durable income for the billion poorest people on earth. Horticulture is unique in that profit margins are large enough that even a medium investment (less than $2 million USD) can create dramatically higher, sustainable incomes for a thousand people. 

In the next year, Cinch wants to broaden our impact by replicating our model farm across Kenya. From managing 200 acres in early 2020, we want to manage close to 1,000 acres by the end of this year. That expansion will demonstrate that our model is flexible enough to include smallholders in a wide variety of circumstances, such as different plot sizes, soil types and climates.

Our vision is to use reliable incomes as a foundation to extend goods, services and training to help our smallholders escape poverty and enter the middle class. We're already leveraging our proprietary data on our farmers' incomes to develop credit products, home improvements (like concrete flooring) and other value that will improve their quality of life. At Cinch, we are optimistic that smallholder farmers can thrive in the twenty first century by not farming at all. Instead, they are investors (and owners) of a farm we run on their land. We can build these farms anywhere from Arusha to Ho Chi Minh City and they will help people who earn $500 a year now quadruple their incomes. 

We have two primary challenges. First is to maintain our unit economics, which are distilled into "operating profit per acre per year" despite the uncertainty of farming. Second is to develop a scalable strategy to recruit farmers and transform land.

Maintaining our unit economics is difficult, as we already saw with flooding events in 2019 and 2020. Less than a year since launching, we have a clear understanding of our costs and their variability. 

On the revenue side, meeting our targets will require us to expand the number of acres Cinch is managing. Several bottlenecks will make this expansion operationally complex, but achievable. Second, deploying our infrastructure requires tight coordination across many vendors: hydrologists, borehole drillers, construction teams and irrigation experts. We are improving that coordination by developing a “playbook” that describes the sequencing of projects, who is responsible for what and when. 

We currently have a hands-on approach to signing up new farmers. That approaches has yielded important lessons on how to extend our limited resources. Onboarding a farmer often requires multiple meetings, consultations with their families and endorsements from existing farmers. Our goal is to find ways to condense this process into a recruitment strategy that leverages local ambassadors working on behalf of Cinch.

We have two primary challenges: 

1. Maintaining our unit economics, which are distilled into "operating profit per acre per year", despite the uncertainty of farming
2. Developing a scalable strategy to recruit farmers.

Unit Economics

Maintaining our unit economics is difficult, as we already saw with flooding events in 2019 and 2020. In our first year of operations, we have a clear understanding of our costs and their degree of variability. Our capital expenditure on items like boreholes and irrigation equipment is by contract and predictable. Input costs, like manure, seed, fertilizer and sprays to protect against diseases, can rise with supply chain challenges like Covid-19. 

On the revenue, there are two drivers: sales price per Kg, and yield (i.e. the amount harvested) per acre. We pre-negotiate sales prices on 18 month contracts to lock in predictable prices. Yield encapsulates all of the uncertainty of farming: soil pathogens, weather, pests and low germination rates can all reduce yield. Cinch is reducing yield uncertainty with multi-peril crop insurance, and a rigorous program of testing and iterating to improve our growing methods. Testing includes: different varieties of seed, manure and fertilizer, different spray programs and land preparation methods

Scaling

Our current approach to recruiting farmers is manual and time intensive: we meet with each farmer in-person, often several times, to explain Cinch's value proposition. We are now implementing a model where farmers self-organize into cohorts, so that we have a minimum viable amount of land before we start installing infrastructure on a new farm. 

We are exploring a collaboration with a local microfinance institution (MFI) to offer flexible payment terms for Cinch’s leases to farmers. Cinch currently offers monthly payments for our leases to farmers, which is better for our company’s cash flow and helps keep farmers’ incomes smooth. Some farmers have given feedback that they would prefer to receive their payments in larger quarterly or annual “lump sum” payments. These larger sums would allow them to use the money for larger projects like improving their houses or paying school fees.

It is outside of Cinch’s current scope to provide financing options on leases, so we are excited to parter with this local MFI to offer flexible payments in the form of loans, which Cinch will service on behalf of the farmer.

Cinch serves two customer bases: smallholder farmers who own land, and commercial horticulture buyers.

For smallholder farmers, our "product" is a lease, paid in monthly installments, along with opportunities to earn a salary by working at the farm, and receive a quarterly dividend from Cinch's profits. For these farmers, the value proposition is clear:

Farmer's average monthly income in Solio, before joining Cinch: $49.30

Farmer's average monthly income in Solio, after joining Cinch: $147.66

This is a transformative increase in income for these farmers, allowing them to make investments like concrete floors for their homes, water tanks and pumps. They can also pay school fees for their children. Finally, by increasing the productivity of their land (with irrigation and other investments), Cinch is increasing the value of these farmers' main asset.

For commercial horticulture buyers, Cinch's products are high quality vegetables, grown on set schedules and in large volumes. We compete with other commercial farms on price and quality, and exceed them in terms of year-round availability of crops like French Beans and Garlic. Our buyers value year round supply so much that they secure advance orders on 18 month contracts, which locks in a fair price for both parties. In seasons when supply of these products is low, the buyer is paying a below-market rate to Cinch; the opposite is true in high seasons. Predictable revenue (for Cinch) and costs (for our buyers) are tremendously valuable in markets like Kenya, where market prices can be highly volatile.

At steady state, Cinch has an operating margin of 45%. Our plan to reach that target consistently includes:

Securing debt funding to cover capital expenditure and working capital

We have a strong understanding of the cost per-acre to grow our crops, both for up-front capex costs and recurring costs. Cinch has begun fundraising for a draw-down debt facility to meet our capital needs for projected expansion, including deploying 10 farms of 50 acres each in the next 3 years.

Reducing recurring costs

With a demonstrated track record of setting up a farm and growing produce, we are pursuing long-term, high volume contracts for key inputs to drive down our largest recurring costs. Examples include: partnering with a local ranch to reduce our manure costs by 70%, securing bulk pricing on fertilizer with a local provider, and installing solar arrays to reduce the monthly electric bills to power our borehole pumps.

Increasing revenue

Cinch has a research and development program to optimize the revenue we generate on each acre. The program includes testing new crops and varieties to either reduce the time from planting to sale, increase the sale price per Kg, or both. Our current benchmark is to generate more than $18,000 USD per acre per year.

We have raised financing in 5 ways:

1. Seed round: We raised initial funds from family and friends to start our business in May 2019
2. Revenue: Cinch began generating revenue in February 2020
   1. Sales of French Beans: $130,000 in Q1 and Q2
   2. Expected sales from Garlic in Q3 and Q4: $225,000
3. Debt facility: Cinch secured a loan of $100,000 at commercial terms in March 2020
4. Seed follow-on round: We are currently in the process of raising additional funds through an equity raise at the same terms of our initial seed round
5. Fellowship grant: We received a fellowship grant of $100,000, which will be disbursed in 2 tranches (September 2020 and September 2021)

We are currently pursuing both debt and equity fundraising.

On debt, we are negotiating with several investors to provide a draw-down facility on commercial terms to fund our expansion to 500 acres. We expect to raise at least $4MM to fund that expansion.

Simultaneously, we are doing a limited equity fundraise to provide patient capital for research and development on new products and business lines. We do plan to exceed $750,000 on our equity fundraise in this round.

Inputs (Fertilizer, manure, sprays): $154,000
Crop insurance: $24,500
Utilities (electricity + water): $15,500
Labour: $73,000
Seed: $23,000
Cinch employee salaries: $104,000
Employee health insurance: $8,000
Lease payments to farmers: $36,000

Total: $438,000

Cinch takes an integrated approach to confronting the challenges of smallholder farming. While smallholder farming is a contributing factor to longstanding poverty, it is just one of many.

Being part of the Elevate Prize, including connecting with Solver teams, would be a tremendous opportunity to look beyond the immediate problems Cinch is addressing and think holistically with capable partners. 

Cinch should exist within an ecosystem of products and services that help smallholders and their families graduate into stable incomes. The Elevate Prize attracts a unique cohort of organizations that are tackling the same challenges; we're honored to connect with them.

Furthermore, we know the impact Cinch could have with the monetary and technical support of the Elevate Prize. We create over two full time jobs for every acre we manage and over $250 in guaranteed income for the landowner. Cinch's vision for the future of agriculture is inclusive prosperity. We believe the Elevate Prize shares that goal and would be a peerless partner in achieving it.

We are not a tech-first company. Cinch recognizes that there is a human (and somewhat inherently non-scalable) component to building trust with smallholder farmers and asking them to make change their way of life to benefit their families. That said, we know that technology will play a powerful role in accelerating the growth of our business and extending our impact to millions of beneficiaries.

We are already using a digital platform to onboard farmers and workers on our farms. That platform allows us to capture valuable transaction data on their incomes, which Cinch pays. Having worked at an alternative credit provider, I'm aware of the value of that information to provide our farmers access to onward goods and services, like financial products. 

Cinch's core focus is managing land for our farmers; we need partners who can be thoughtful about helping these farmers build durable wealth with their new incomes.

Providing access to financial services

• Musoni- Offering lump-sum advances on farm leases for farmers who need greater amounts than Cinch's monthly lease payment
• Safaricom- Giving savings incentives for farmers to store their income and build wealth over time with M-pesa savings accounts

Documenting land ownership for farmers

• Meridia and Landesa- Creating digital deeds that allow farmers to document land ownership and use that ownership as collateral for onward services

Including farmers + families in essential services

• Kenya's National Hospital Insurance Fund- Providing undocumented farmers and their families access to basic health insurance
• Kenya's National Social Security Fund- Providing undocumented farmers and their families access to savings accounts